C&G’s Guide to Buying: Flip or Hold?

Are you entering the property investment game? You might well hear terms such as ‘flipping’ and ‘holding’ property. There are many strategies that investors use to maximise their return on investment, and it can be difficult to determine the best option for you. This C&G blog unpacks the pros and cons of adopting a flip or hold method when buying property!

Property Flipping

To ‘flip’ a home means purchasing with the intention of selling it for a quick profit. It is a short-term approach that is successful when a buyer purchases below market value and resells at a higher price after implementing strategic renovations or upgrades. ‘Flipping’ relies on ‘timing the market’ – which means buying when it is a buyer’s market, and selling when the tide turns to favour the vendor.

Property flipping is for risk-tolerant investors who want to achieve a quick profit - when market conditions allow. These investors will typically converse with industry professionals throughout the process, build a real estate category ‘little black book’. These experts can include agents, conveyancers and builders. Flipping involves both luck and strategy – it’s the real estate preserve of the decisive!

While the rewards can be plentiful, there is also the possibility of not making a profit on your renovation. The property market and wider economy can be unpredictable. Flipping requires very careful planning and clear budget boundaries, as unexpected renovation costs and sales marketing fees may dilute the final profit amount.  

Property Holding

Investors who ‘hold’ onto their asset often utilise it as a rental property for additional income or long-term capital gains. Better known as the ‘long game’, holding allows for more consistent returns, even if they take longer to produce. There are also tax benefits you may claim, such as depreciation and the interest on your investment mortgage. Holding also makes it more likely that you’ll be able to build up equity in your investment, ultimately being able to leverage this value towards expanding your investment portfolio.

Holding property means having the budget to pay ongoing costs for a substantial period of time. You’ll need to budget for property management fees, leasing costs, maintenance and body corporation fees if you own an apartment. There may also be vacancy periods while you secure an appropriate tenant. The risk of long vacancy periods can be minimised if your property is within a desirable location and has appealing features that attract tenants.

Are you planning to invest? Chisholm and Gamon are happy to assess your portfolio and advise your next steps. Our experienced team is well-versed in all property matters and consistently guide clients towards reaching their goals. Reach out today!